Problem - The stockholders' equity accounts of Karp Company at January 1, 2017, are as follows.
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Preferred Stock, 6%, $50 par
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$590,000
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Common Stock, $3 par
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471,000
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Paid-in Capital in Excess of Par-Preferred Stock
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185,000
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Paid-in Capital in Excess of Par-Common Stock
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296,000
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Retained Earnings
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761,000
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There were no dividends in arrears on preferred stock. During 2017, the company had the following transactions and events.
July 1 Declared a $0.90 cash dividend per share on common stock.
Aug. 1 Discovered $28,000 understatement of depreciation expense in 2016. (Ignore income taxes.)
Sept. 1 Paid the cash dividend declared on July 1.
Dec. 1 Declared a 15% stock dividend on common stock when the market price of the stock was $20 per share.
Dec. 15 Declared a 6% cash dividend on preferred stock payable January 15, 2018.
Dec. 31 Determined that net income for the year was $362,000.
Dec. 31 Recognized a $219,000 restriction of retained earnings for plant expansion.
Journalize the transactions, events, and closing entries for net income and dividends.